The company has suffered loss for the second consecutive year. The production line was not smooth because of the interruption of gas supplies for four months.
The company also could not utilize the newly installed roller kiln. There is intense competition in tiles from under-invoiced products available in the market at exceptionally low rates.
The future outlook also shows continued tremendous pressure on the selling prices. On the other hand, there is escalation in energy cost which made margin very thin.
Intensive competition forces the enterprise towards higher discount and soft term of credit sales.
The directors, resolved to reduce cost and improve efficiency continues.
Frontier Ceramics Limited is an ISO 9001-2000 certified company.
The company was incorporated in Pakistan in July 1982 as a public limited company.
Its registered office and manufacturing facilities are located at 29, Industrial Estate, Jamrud Road Peshawar NWFP.
The company was listed on the Karachi and Lahore Stock Exchange in April 1992.
It is engaged in the manufacturing and sale of sanitary ware and ceramics tiles.
During the last six years its shareholders equity has increased from Rs 25.11 million in 1998 to Rs 77.77 million in the FY 2002-03.
The company has total 7.74 million paid-up shares of Rs 10 each. Its 2,792 individual shareholders held 66.82% stock of the company on the closing date of the accounts under review i.e., 30th June 2003. This was followed by three financial institutions who held 28.82% of the total share.
At present the share in the company is being quoted at Rs 3 per share at 70% discount to its par value.
However, during the last 52 weeks the market value its share appreciated above its par value. In this period the share price increased to Rs 11 from Rs 1.10 per share.
The annual production capacity of the plant has been rated at 3000 tons of sanitary ware and 620 thousand square meters (sqm) of tiles.
Last year sanitary ware production was recorded at 236 tons only. This was out merely 7.9% of the capacity.
During the year under review production sanitary ware was not recorded. However directors reported that the company is planning to restart the production of sanitary ware alongwith other activities in collaboration with foreign manufacturers.
In the tiles department, out-put increased to 504.77 thousand sq meters as against 478.13 thousand sq meters produced in the preceding year.
This shows 5.6% increase in output and 81.4% capacity utilization. Gross sales of the company for the year under review was in the sum of Rs 144.3 million. Net sales after deduction of sales tax and discount works out to Rs 114.01 million as against Rs 116.57 million in the preceding year.
Sale of tiles amounted to Rs 135.44 million as against Rs 134.31 million showing slight growth in the sale of this item.
Sale of sanitary ware was recorded at Rs 8.37 million reflecting 40.4% decline from Rs 14.04 million sales booked in the preceding year.
There has been some export sales also during the year.
The company has not been able to achieve desired results in production and sales. Interruption of gas supplies in the months of December 2002, and January to February 2003 and April 2003.
This hindered production in these months. The capacity of the newly installed roller kiln could not be utilized due to gas supply problem.
Sales of tiles reduced due to intense competition in the market and dumping of under invoiced tiles. Both inventory and trade debts were on higher side.
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Performance Statistics (Million Rupees)
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30 June 2003 2002
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Share Capital-Paid-up: 77.41 77.41
Unapp Profit: 0.36 7.57
Shareholders Equity: 77.77 84.98
Surplus on Revaluation of F/A: 196.48 204.67
L.T Debts: 76.71 90.76
Deferred Liabilities: 36.48 36.27
Current Liabilities: 207.42 186.57
Tangible Fixed Assets: 311.25 309.64
L.T Deposits: 1.21 0.20
Current Assets: 282.40 293.41
Total Assets: 594.86 603.25
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Sales, Profit & Pay Out
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Sales-Net: 114.01 116.51
Gross Profit: 26.57 30.48
Operating Profit /(Loss): (1.69) 3.38
Financial (Expenses): 6.44 6.12
(Depreciation): 4.97 5.23
(Loss)/Before Taxation: (6.33) (2.39)
(Loss)/After Taxation: (7.31) (2.97)
Earnings Per Share (Rs): (0.94) (0.38)
Share Price (Rs) Dated 19-12-2003: 3.00 -
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Financial Ratios
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Price/Earning Ratio: (-) -
Book Value Per Share: 10.04 10.98
Price/Book Value Ratio: 8.46 -
Debt/Equity Ratio: 22:78 24:76
Current Ratio: 1.36 1.57
Asset Turnover Ratio: 0.19 0.19
Days Receivables: 206 220
Days Inventory: 708 713
Gross Profit Margin (%): 23.30 19.31
Net Profit Margin (%): (6.41) (2.54)
R.O.A (%): (1.22) (0.49)
R.O.C.E (%): (1.89) 2.78
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Plant Capacity & Production
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A) Sanitary Ware Tons
Installed Capacity: 3000 3000
Production - 236
Capacity Utilisation (%): - 7.87
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B) Tiles (000 Sq.M)
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Installed Capacity: 620.00 620.00
Production: 504.77 478.13
Capacity Utilisation: 81.41 77.11
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COMPANY INFORMATION: Chairman S.U. Durrani; Chief Executive: Shamsul Hassan; Director: Major General Jehanzeb Khan (retd); Company Secretary & Chief Financial Officer: Rab Nawaz; Registered Office/Head Office: 29 Industrial Estate, Jamrud Road, Peshawar NWFP.